Villa developments remain the preferred asset type and the strong demand levels continued to push prices upwards, with an average y-o-y increase of 2% across developments. Meanwhile capital value growth across apartments gradually slowed over the last four quarters. The price correction was more prominent across mid to low-end developments, which have seen a 2%-4% drop in values y-o-y. Average capital values across mid-end apartments are estimated at BHD 647/sqm, whilst across low-end apartments, it is estimated at BHD 465/sqm.

The rental market largely mirrored the sales market with rental values in villas continuing their strong growth with y-o-y price increases of 4.5%, which equates to an average rental value of BHD 1,139/month.

“This appreciation occurred largely due to an increase in rental values across low-end villa products, which have risen by 20% y-o-y. We attribute this to several low-end compounds reaching full occupancy over the past year causing limited availability, and also with some landlords carrying out refurbishment works,” said Hashim Kadhem, Head of Professional Services, Bahrain.

Average apartment rents meanwhile have been consistently stable over the past year with no price movement..

According to Swapnil Pillai, Associate Director Research, Middle East, Bahrain has benefitted from not only an oil-price boost, which helped GDP grow by 5.9% in 2022, but also by efforts to attract investments and diversify its economy. Non-oil revenues were 28% higher on a yearly basis, reaching BHD 1.065 bn in 2022. To drive future growth, Bahrain has announced a four-year strategy for the tourism sector that aims to attract 14.1 million tourists by 2026.”

In line with growing economic activities, demand for office real estate bounced back during 2022.

High demand levels were more prominently witnessed across Grade A assets, which have seen a healthy increase in occupancy levels throughout the year. Rental values for Grade A properties tracked by Savills remained stable whilst rents across Grade B projects have seen the highest yearly increase, as a result of spillover demand. Average rental values across Grade A assets are currently estimated at BHD 6.5/sqm/month. Meanwhile, rents across Grade B assets were estimated at BHD 5.5/sqm/month, recording growth of 15% y-o-y.

Despite the steady increase in demand levels for office properties, activity levels across Grade C assets have remained limited. It aligns with global and regional office trends where corporate occupier preference has shifted towards modern, energy-efficient and ESG-compliant space, features that are mostly available in higher grade offices.

“Subsequently, rents have dropped by 4% on a quarterly and yearly comparison across Grade C properties, which has led to an overall drop in the office rental index in Q4 2022”, Hashim Kadhem added.

Similar to rental value trends, capital values across Grade B assets saw a steady quarterly increase throughout 2022. Average capital values across Grade B assets are currently estimated at BHD 905/sqm, an increase of 5% y-o-y.

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